hms iron duke

hms iron duke

Wednesday 14 December 2011

Be Careful Europe. You May Get What You Wish For

Alphen. The Netherlands. 14 December. Yesterday in Strasbourg at the European Parliament European Parliamentarians made some of the most shocking and inappropriate attacks ever against one member-state - Britain. The leader of the European People’s Party warned of ‘punishing’ Britain and of ‘tanks and Kalashnikovs’. In the feeding frenzy of myth-making and scapegoating much of it using language that verged on the profoundly disrespectful to Britain and its people.  Indeed, this was unparliamentary language at its very worst, a clear attempt to create a new ‘narrative’ for a crisis entirely of the Eurozone’s own making by placing responsibility on to the British for the appalling failure of Eurozone leadership. 

This is a blame game.  Indeed, it is a blatant attempt to implicate a country that is not even a member of their benighted currency and which warned against its structural contradictions from the very outset. Even President Barroso joined in this stitch-up…and we all know who is behind him. How dare they?

Some talked of British ‘egotism’ and ‘nationalism’. These people would not have the freedoms they enjoy but for the sacrifice of the British people in both World War Two and the Cold War. Some talked of a lack of solidarity by Britain. These are the same people who for years have dodged their responsibilities for Europe’s security and defence and imposed its true cost on the British people. These are the same people who have dodged their responsibilities in Afghanistan forcing the British to do too much of the dying. These are the same people who wringed their hands over Libya as the British did what was necessary to prevent a massacre in Benghazi. How dare European parliamentarians lecture Britain about solidarity?

As for the Eurozone crisis the full extent of the Brussels stitch-up is only now becoming apparent. There was no need for a new treaty, only Chancellor Merkel wanted that and by demanding it she sought to make the crisis one of the EU at 27 rather than 17. It is in any case already falling apart validating once again British pragmatism.  What is more to the point is that having tried to make this a crisis 'owned'by all 27 neither Merkel nor Sarkozy were prepared to offer Britain the joint leadership role befitting Europe’s second or third largest economy and strongest military power. No, Britain was expected to subject itself formally to German and French leadership even though she is one of Europe’s Big Three.  That will never happen.  How dare they?

And now these same people pretend that the Euro-crisis is all of Britain’s doing because London failed to properly regulate the banks in the City, many of which are German and French et al. They conveniently forget Germany’s failure at the summit to offer any real leadership to solve the immediate crisis. They conveniently forget the chronic debt into which their national leaders have pitched almost all of the Eurozone countries. They conveniently forget that Britain is the second net contributor to the EU and that the British taxpayer has for years been transferring huge amounts of money to southern and eastern Europeans with little or no prospect of any benefit. They also fail to notice that Prime Minister Cameron is climbing rapidly in UK opinion polls for saying 'no' to the wrong treaty at the wrong time for the wrong reasons for Europe.

Last week I warned against Britain retreating from Brussels however seductive the vision of our standing defiantly on the White Cliffs of Dover shaking our fist and rekindling the defiance of 1940. “Very well, alone then” was, I suggested, neither a policy nor a strategy for Britain. After yesterday’s sham of a debate in the European Parliament, more redolent of a fascist show trial than a modern, tolerant democratic Europe, I am no longer so sure.

Be careful Europe. If you continue down this road of abusing, blaming and scapegoating Britain for your own lamentable failings you may indeed get what you appear to want. Britain out of the EU.

Julian Lindley-French

Monday 12 December 2011

Where Next for Europe?

Alphen, the Netherlands.  12 December.  A senior French official privately likened Cameron's negotiating position at last week's European Summit to that of someone invited to a wife-swapping party who failed to bring the wife.  Very French.  A more accurate metaphor would be someone invited to a seemingly perfectly respectable dinner party who upon arrival is told to sell his wife as the price of entry as the hosts cannot afford the party they promised!  In fact the Merkozy ambush on Cameron simply confirmed what was already apparent; the marginalisation of Cameron had been prepared beforehand. So, where do we go from here? 

At least we now know the German-French plan of attack against Britain and the message all their surrogates in the satellite states have been instructed to peddle.  I have just been watching Dutch TV and the Dutch Finance Minister, Jan Kees de Jager, explain to the Dutch people (with a straight face) that the Euro crisis was caused by a lack of banking regulation.  He implied that the British were unreasonable because they resisted more growth-strangling Euro regulation on the banking sector which would have disproportionately damaged Britain for a crisis not of its making.  Cameron made a mistake last week because he opened the door to this kind of nonsense by justifying his stance too narrowly on the protection of the City of London (which is questionable) rather than the profoundly important strategic implications of what Germany and France were trying to do - entrench Europe in growth-free protectionism. 

Yes, deregulation of the banking sector together with a lack of proper oversight did indeed cause a crisis back in 2008 for which the British taxpayer is now paying a high price.  However, the Euro crisis is not a liquidity crisis, as President Sarkozy would have us all believe, but a structural debt crisis.  Debt that was caused by a combination of German exports to a Eurozone which offset the high cost of German production, excessive government borrowing by Eurozone members, the expectation by southern and eastern Europeans that northern and western European taxpayers would go on transferring wealth indefinitely and the exposure of Eurozone banks to said sovereign debt.  The banking crisis may have exacerbated the Eurozone crisis but the cause of it...certainly not.

What the British did last week was to reveal the true nature of the power politics at play. Eurozone-Plus negotiations will now begin on the details of a new intergovernmental treaty designed to impose stricter budget controls on member-states via the European Commission (and, by further extension, via Germany).  There are already signs of the acute political tensions and the sovereignty-crushing implications of what the 24 'others' in the Eurozone-Plus signed up to.  The Socialist contender in the French presidential elections has said that any changes should be delayed until after the elections in May 2012 and in any case he would re-negotiate the deal.  Denmark and Ireland are hinting strongly at the need for referenda before any such treaty change can be ratified which would further delay a 'solution' to the crisis, time the Euro simply does not have.   

Two things are now needed; a sound political strategy in London and a cool head in Berlin. Implicit in the position of Chancellor Merkel is in fact a realisation that no amount of financial engineering or European Central Bank bond purchases will help resolve the immediate crisis.  Greece, and maybe even Italy and a few others, will sooner of later have to fall out of the Euro, if of course the currency itself does not collapse.  Indeed, in Brussels Merkel carefully avoided any commitment that might have been seen as a serious attempt to save the Euro as currently configured.  Germany's objectives instead seem to be to create a structure that would a) prevent a similar crisis destroying a German-centric survivor currency; and b) limit the impact of the inevitable on the German taxpayer.

Following German logic what really matters now is that Europe recovers over time to become competitive globally.  This also implies a further set of questions about the role and extent of future transfers from the western European taxpayer to the rest in pursuit of such an end and whether or not said taxpayers are prepared any longer to maintain such an open-ended commitment. That is why this moment is both structural and strategic.  And here is the irony.  Critical to that game will be the relationship between London and Berlin.  Here Britain has a strong card to play because not only is the single market central to that mission, whilst the Euro is the cancer killing the European body economic, but Britain and Germany agree about the need for a competitive Europe. 

Therefore, if cool heads prevail London and Berlin can begin a dialogue of strategic equals that would not have been possible if Britain had been reduced to a kind of super-Belgium by signing up to a hopelessly flawed deal last week.  Britain is not Belgium - it is the world's fifth or sixth largest economy which many serious commentators worldwide believe is the only European economy likely to challenge Germany over the next twenty or thirty years or so precisely because of its greater openness to the world.  Indeed, had Britain signed up to the Brussels Botch it would have been subjected to the same sovereignty-crushing constraints as the other Eurozone-Plus members with the added 'bonus' of having London pay for much of the cost of 'fixing' a failed currency via a future financial transactions tax 85% of which would have been paid in London.  Fair or what?

Today Britain has preserved the strategic room of manouevre worthy of one Europe's Big Three and which Germany and France last week tried to deny it. When Berlin emerges from its funk it will realise it has to deal with Britain.  The French are unlikely to make that connection whilst lost in pre-election 'faux' anti-Britishness.  Indeed, a more sober Berlin will realise that a deal with Britain is much more likely to promote the kind of economic reforms and disciplines Germany knows full well Europe needs to compete in this world. 

The alternative for Berlin is a structural relationship with France which simply sucks Germany ever deeper into a protectionist, statist, indebted Europe which sooner or later will be overrun by the very forces of globalisation enshrined in the City of London.  The longer Europe puts off those reforms the more deadly the crisis that will eventually consume it...and the current malaise is only a ripple of that economic tsunami.  Hopefully by then Britain will have long before readied itself for the real world.

Cameron?  He must hold his nerve against those many siren voices that seek French and German approbation at any price.  To say that it is twenty-six versus one is ridiculous.  It is two of Europe's three strategic powers versus the third.  All Europeans matter, and should matter equally, but the nature of this crisis has demonstrated the extent to which some Europeans are more equal than others.

Where next for Europe?  Avoid French wife-swapping parties.

Julian Lindley-French
     

Saturday 10 December 2011

Well Done, Prime Minister. Continent Isolated, Britain Right!

Alphen, the Netherlands. 10 December. T.S. Eliot wrote, “We are the hollow men. We are the stuffed men”. The most telling image from this week’s European Summit was British Prime Minister David Cameron sitting all on his lonesome in the Council chamber. Not only did it show the childishness of our Dear European Leaders, but also the extent to which this summit was really more power politics than principle. Time will show Cameron to have been right and our Continental friends should realize that the massive majority of Britons have no problem with standing alone. 

The summit was not about the Euro – nothing was done to fix that. Rather, it was about the rebranding of the European Union into an Empire. A German Empire led by Berlin with its French Passe Partout acting as agent. The hollow men and women of the twenty-four other member-states wished to do nothing that might offend Europe’s new headmistress, Chancellor Merkel. So, David Cameron was made to sit on his own in one corner of the room like some offending schoolboy. For Cameron it must have been like being back at Eton.  It was pathetic to observe, as I did – I was one hundred metres away.

President Sarkozy, employing the gracelessness with which we have come to associate with a man who does a great nation no honour, suggested that Cameron had made “unacceptable demands”. If he means by that that Cameron had acted to protect Britain’s core financial services and by extension the British people from a Euro-saving tax 85% of which would have been paid in and by Britain then I suppose that is ‘unacceptable’. Can you imagine a French president agreeing to such a punitive tax on a critical French industry? No way. Can you imagine a French president opening the door to an aggressive set of European regulations that would in time destroy said industry? One only has to look at the ninety-plus cases the French are facing in the European Court of Justice for breaking EU rules to know the answer. 

There is no such thing as a free tax and the result would have been the British people paying for a currency disaster that French newspaper Le Monde says rightly has nothing to do with the British. Moreover, Britain is already the second biggest net contributor to the EU mainly because of a previous Franco-German power play when they stitched up a deal on the Common Agricultural Policy (CAP) that forces the British taxpayer to subsidise French farmers. Sarkozy even had the temerity to suggest that banking deregulation had caused the Euro crisis. This may have something to do with the fact that in January the French will have to honour €52.9 billion in government bonds, a further €35.9 billion in February and by April a further €50 plus billion.

Taken together the refusal of ‘Merkozy’ to address Eurozone sovereign debt, Chancellor Merkel’s insistence that the European Central Bank cannot act as the lender of last resort and the failure to address Europe’s appalling growth-strangling over-regulation now dooms the Euro to failure. No amount of effort to shift the blame for failure onto Britain and Cameron will work because time, and not much time, will demonstrate who really is responsible. 

Of course, the usual suspects came out of the woodwork back in London to attack Cameron. The BBC’s flagship radio news programme ‘Today’ embarked on one of the most politically one-sided set of interviews and commentary’s I have ever heard. Retired diplomats such as Lord Hannay suggested that Britain will now be excluded from ‘process’. Lord Hezeltine even suggested that Europe is in its inevitable way to forming a United States of Europe. What planet are these people on?

They miss three simple verities. First, most political moments are indeed ‘process’, but every now and then a ‘moment’ comes along that is strategic. At such moments a stand needs to be taken and this was indeed a strategic moment. Second, a profound ideological split exists between a statist Europe beloved of the French and the more free market British who are much more attuned to global realities. To have signed a deal on those terms would have subjected Britain to European statist nonsense effectively ending all hope of the flexible economy Europe (and Britain) needs if it is to properly adapt to this globalized age. Third, and above all, not only the future of the Euro was at stake, but also the future power map of Europe.

The choice was between a legitimate Europe made up of democracies and a power Europe led by Germany and France. The deal on offer to Britain was in effect to become a super-Belgium subject to German and French whim. Berlin and Paris have done everything they can over recent years to exclude Britain from their power core and this was to be the final act. Britain will never accept subjugation to their leadership and rightly so.

Through the centuries there have been times when Britain has stood alone against the hegemony of one or two powers in Europe. This is another such moment and we British are again called on to make a stand. So be it! The one inspiring thing that came out of the Brussels summit was to see a British Prime Minister stand on an issue of principle. Now Britain stands clear in opposition to a Europe it does not believe in.  That is the best negotiating position London can possibly have. 

So, be sure of one thing Chancellor Merkel and President Sarkozy this game has only just begun. In Prime Minister Cameron you are facing at least one European leader who understands that.

Well done, Prime Minister. Continent isolated, Britain defiant…and right!

Julian Lindley-French

Thursday 8 December 2011

Stiffen the Sinews, Prime Minister

Alphen, the Netherlands. 8 December.

Dear Prime Minister Cameron,

We are both off to Brussels today. You are going to attend some minor event at which you are expected by your German and French hosts to play a minor bit part. I will be attending (and you will love this) a meeting on the cost benefits of a common European defence policy. Who says our Continental friends lack a sense of humour!

The EU Brussels Summit will be the most important European moment since Maastricht when the Treaty on European Union 1.0 was signed. Over the years it has slowly been expanded and now its tentacles reach into all aspects of British life. Each iteration of Euro-spread has seen a British prime minister draw a line in the sand only for it to be washed away by the oncoming tide of European regulation. Having made its strategic choice not to join the EU-defining single currency back in 1991 Britain’s semi-detachedness is no longer defensible. Either Britain joins the Euro or leaves the Union. There is no middle ground anymore and you must understand that is the reality implicit in this tous azimuths summit.

Indeed, what you will confront in Brussels masquerading as an attempt to save the confounded Euro is an attempt to effectively change the Union into an Empire. You must at all costs resist this. Your premiership depends upon it. What is at stake in Brussels is a precedent over the use of power by two EU member-states via the denial of sovereignty to the rest. This is a defining moment towards which the entire European movement has been travelling since its founding back in 1950.

Sadly, in the spin apparent on the airwaves and in the column inches you have instead decided to retreat and then mask your failure from the British people. You insist that because no formal transfer of power will take place between London and Brussels no referendum need be put to the British people. This is legalistic mumbo-jumbo and you know it. Implicit in fiscal union is a profound shift of power from London to Brussels via Berlin and Paris. The implications of a shift of power are just as fundamental as any formal transfer of power...in fact more so.

You say you will not make any “unreasonable demands” and that this is not the time to negotiate. When will there be a better time to negotiate? Do you think Germany and France are not fighting like mad for their narrow national interest? Of course they are. Indeed, their collective strategy is to a) give the impression that there is no alternative but their joint leadership - there is; and b) to pretend that Britain is irrelevant - Europe's second or third biggest economy (depending on exchange rates) and largest financial market.  And yet you seem to imply that somehow it is not cricket for Britain to fight for its national interest. They will laugh at you in Brussels. As President Sarkozy said this week, “...it is a joke, David”. As you old Etonians would say “play up, Mr Cameron”.

And here is the rub (I will indeed become Shakespearian). Yes, saving the Euro for now is an important mission, but not at the expense of Britain’s sovereign will and strategic influence and you must realise the distinction between the two. This is about power and you must enter that room in Brussels clear in your head that you will not sell Britain’s crown jewels. Indeed, the real mission is not to save the Euro per se, but rather to resolve the financial crisis caused by the appalling duplicity of those who established the single currency. That can only be done at 27. If Berlin and Paris insist on a separate treaty of the 17 Eurozone countries then it is a power grab – pure and simple and should be seen as such. Behind it will be a principle of German and French power leadership in Europe that Britain must resist today just as it has always resisted.

By all means be constructive where you can but in return you must insist on a new relationship for Britain with the EU built on a set of quid pro quos. The more Germany and France insist on other EU member-states ‘opting-in’, the more you must insist on ‘opting-out’. The more EU state sovereignty Berlin and Paris want to bring under their control via the supine European Commission the more you must insist real power is ‘repatriated' to London. Specifically, you must demand an end to the German and French-inspired Commission attempts to impose their statist ideology on the City of London. You must also insist that the Working Time Directive no longer applies to Britain and all aspects of the Treaty on European Union that deny Britain real control over its borders are also repatriated. Above all, if they go for full exclusion of Britain from all aspects of EU economic governance you must make it perfectly clear that you will call an in-out referendum.  For that is what is at stake. The alternative is taxation without representation.

If you think that distasteful and too narrowly self-interested then just go to the web-site of the European Court of Justice. There you will find a page devoted to member-states breaking their treaty obligations when it suits their national interest. Germany has twice as many cases pending before the Court as Britain and France three times as many. For all the talk emerging from Berlin and Paris about the need for ‘discipline’ you can bet your bottom Euro that it will not apply to them. And remember, you have many more friends on this side of the Channel than you seem to realise if for once you can think strategically rather than tactically – your biggest failing. The mere sight of you fighting will galvanise other Europeans thus far intimidated by the German-French fait accompli.

I am not wont to quote Henry V but I think this summit warrants a little paraphrasing, Prime Minister. “In peace there’s nothing so becomes a man as modest stillness and humility; But when the blast of ‘jaw’ blows in our ears then imitate the action of the Tiger”.

Stiffen the sinews, Prime Minister.

Yours sincerely,

Julian Lindley-French

PS I will let you know how our talks about a common European defence policy get on. Don’t hold your breath!

Wednesday 7 December 2011

Pearl Harbor: A Date Which Will Live in Infamy

Alphen, the Netherlands. 7 December, 2011. Seventy years ago today at 0600 hours Pacific Time on December 7, 1941 Captain Mitsuo Fuchida launched Operation Z from the Imperial Japanese Navy aircraft carrier Akagi, flagship of the attack fleet. Fuchida led one-hundred and eighty-three dive bombers, torpedo aircraft and fighters in the first wave of strikes against the US Pacific Fleet anchored at Pearl Harbor, Hawaii. Minutes later a further one hundred and sixty attack aircraft took off from five other carriers – the Kaga, Soryu, Hiryu, Shokaku and Zuikaku.

Some two hours later the surprise attack had sunk four US Navy battleships, with four others badly damaged, along with three other ships sunk and seven damaged. One hundred and eighty-eight US Navy and US Army Air Corps aircraft had also been destroyed. Sadly, two thousand four hundred and two US military personnel were killed and one thousand two hundred and forty seven wounded. Fifty-seven civilians were also killed and thirty five wounded. The Japanese lost twenty-nine aircraft and five midget submarines with sixty-four personnel killed and one captured.

Two days later the British battleship HMS Prince of Wales was sunk together with the battlecruiser HMS Repulse, with the loss of eight hundred and forty Royal Navy sailors. For the British the tragic irony of Pearl Harbor was that the Japanese High Command had been inspired by the British naval air attack of 11-12 November, 1940 on the Italian fleet base at Taranto. This attack was launched from a task force under the command of Rear-Admiral A. L. St G. Lyster RN and which included the fleet carrier HMS Illustrious.  Twenty-four aircraft from 813, 815, 819 and 824 Squadrons Fleet Air Arm successfully crippled the Italian Fleet.

Strategically, the Pearl Harbor attack was a failure. Captain Fuchida failed to deliver the knock-out blow the Japanese had hoped for. The Japanese Commander-in-Chief, Admiral Isoruku Yamamoto, may or may not have said, “…all we have done is to awake a sleeping tiger and fill him with a terrible resolve”. However, he is on record as writing; “This war will give us much trouble in the future. The fact that we have had a small success at Pearl Harbor is nothing”. His words were indeed prophetic. All but two of the eight American battleships were raised and returned to war service. Critically, the three US fleet aircraft carriers, Enterprise, Lexington and Saratoga were at sea and unharmed. US carriers were to prove decisive in the destruction of the Japanese carrier fleet at the Battle of Midway six months later between 4 and 7 June, 1942.

The US has been criticised many times since Pearl Harbor for poor leadership, usually without cause. In the aftermath of Pearl Harbor President Roosevelt showed himself to be a master of strategy. First, he decreed that the war in Europe should take priority even though the American people were clammering for revenge over Japan. America’s great European age in many ways began in the Pacific. Second, American industrial might was mobilised and proved the decisive factor in the winning of the two wars – one in Europe and one in the Pacific. Third, the manner by which the US conducted the island-hopping war in the Pacific was a true revolution in military affairs leading to entirely new ideas about the use of naval power and how to manouevre a mass force over strategic distance.

The fourth strategic lesson of Pearl Harbor is one perhaps that is only now becoming apparent. America’s grand strategy, and thus global stability, is dependent on two strategic partnerships both of which must be invested in and both of which require America’s partners to be as far-sighted as President Roosevelt. Europe remains America’s natural strategic partner, albeit one lost in a visionless parochialism. The other? Japan.

As an Englishman and a European I remember the sacrifice of brave Americans on a day that President Roosevelt rightly said will live in infamy.

Requiescat in Pace.

Julian Lindley-French

Monday 5 December 2011

Is This June 1940 All Over Again?

Rome, Italy. 5 December. I am back in Rome, the eternal city, under new management facing a €30 billion austerity plan. Rome, that is, not me.

Niccolo Machiavelli, that great sixteenth century Florentine strategist once said that “...every type of government...should consider beforehand what adverse times may befall him and on what people it may have to rely in times of adversity, and should in its dealings with them act in a way in which it judges that it will be compelled to act should misfortune befall”. As €-Day approaches, 9 December, 2011, there is a lot of ‘befalling’ going on at present. Make no mistake, at this week’s Euro-Armageddon Summit a new power map of Europe will be drawn.

The failure of Europe’s institutions to cope with Euro-stress is leading to a power shift of historic proportions as a new/old balance of power re-asserts itself. It will be a Europe of a winner and losers, of ‘ins and outs’, of creditors and debtors. Even if enacted in the name of the European Union paradoxically forced integration could well mark the beginning of its end. Listening to some of the rhetoric flying around got me thinking; are we facing the economic equivalent of June 1940?

Germany is dominant (by default – no master plan), France subordinated, Britain isolated and puppet governments installed in both Greece and here in Italy. For a historian it all has a very familiar ring to it. There are some anomalies. Polish Foreign Minister Radek Sikorski has told Britain that, “we would prefer you in, but if you can’t join please allow us to forge ahead”. Minister Sikorski once accused me across a Washington table of being too pro-European. Politicians are always ‘pragmatists’ with principle. And, I really wonder if the Polish people identify as readily as He does with His ‘we’ and His ‘us’?

Of more consequence Chancellor Merkel has said rather ominously that “politics has failed” in Europe. Steady, Chancellor. And, President Sarkozy has called for a new EU treaty “re-founding and rethinking the organisation of Europe”. Meanwhile, out-manoeuvred British Prime Minister Cameron has said at one and the same time that a) if the greatest British-marginalising shift in European power politics since 1945 takes place outside a new treaty Britain is happy to acquiesce in its own demise (Churchill is spinning in his grave); whilst b) murmuring darkly that “Britain will defend its national interests” in the wake of last Friday’s failed Paris meeting with Sarkozy.

Two scenarios are likely to emerge from 9 December. Scenario one would see a new German-led core operating at the expense of Europe’s periphery. The forced German-led hybrid integration that Merkel favours will see all the European debtor nations forced to accept a fiscal straightjacket under Berlin’s direction with France and the Commission providing a fig-leaf of legitimacy. In time there will be no alternative but to create a European Finance Ministry. In the absence of effective Europe-wide political oversight democracy will be progressively eroded to the point where the only election that really matters concerns who gets elected in Berlin.

In such a scenario the British will stay out and no doubt fight – politically. Over time London would probably slowly get its act together and begin to build a counter-coalition around Europe’s periphery and beyond and reconstitute old strategic relationships in pursuit of a new strategic end – the containment of German influence. London and Berlin would thus once again find themselves strategic political adversaries.

Scenario two would see Berlin reach out not only to Britain and the EU peripherals but also to those in the wider European Economic Area (EEA) in pursuit of a new pan-European political and economic settlement. Germany would express grave concern about the legitimacy of the Eurozone and the implicit dangers to democracy therein if Berlin is seen to lead overtly for too long. Berlin might even suggest national parliamentarians replace Euro MPs in the European Parliament as part of a new European Constitution (yes, it will return). Euro-MPs are so far distant from the European peoples the X-Factor has more political legitimacy than they do.

Critical will be the relationship between London and Berlin because Germany understands that there are many Europeans within the Eurozone deeply disturbed by Germany’s power and Britain’s exclusion. If Berlin can do a deal with London then that will ensure the all-important strategic reassurance both Berlin and Europe needs to legitimise the profound change from which there is now no escape. Strategic reassurance would also be reinforced if Britain and France together strengthened their leadership of European defence. To that end, London needs to raise its strategically-illiterate, Treasury-driven eyes from the current account balance sheet and recognise that in its armed forces it possesses its one of two tools of critical strategic influence. The other being the City of London.

For Britain this moment is defining. After years of drift and spin the strategic incompetence of its political and bureaucratic elite has left London faced with the most awful set of choices since 1940 when all it could do was fight on at great cost or surrender. If the Eurozone integrates the British economy will escape mass destruction, but British influence in and over Europe will be non-existent and Britain will be reduced to a second-class European state and we British second class European citizens. If the Euro collapses Britain’s influence will be strengthened ,but only over an economically-devastated Europe.

So, is it time to dust of the Spitfires? Certainly, the crisis is leading to old reflexes as Europe’s post-war institutions fail under Euro-stress. And, as an Englishman there is something deep, beguiling and tempting about standing on the White Cliffs of Dover, shaking my fist and bellowing defiantly, “very well, alone then”. But such a fantasy must be resisted – that was then and this is now.

December 2011 is not June 1940 and we need to ensure it does not become so. No, whilst similar power relations can be implied by the shift that has taken place it is important to limit references to Europe’s destructive past. It is most certainly a power struggle but the use of power today is very different. What we need is legitimate and shared grand strategy, the effective organisation of huge means in pursuit of an urgent end. Sadly, what we will I fear get is grand tactics; badly organised and insufficient means leading to a disastrous end.

Therefore, we must all be vigilant but avoid the stereotypes of history that stress always provokes. Otherwise, we may in time be condemned to relive our history and I would not wish that on anyone. For as Machiavelli said, “...in the actions of men, when there is no court of appeal, one judges by the result”. Today, Machiavelli might have added the actions of women...one woman.

Julian Lindley-French

Friday 2 December 2011

€-Day: Just How Broke Are We Europeans?

Oslo, Norway. 2 December. €-Day approacheth and with it the Onion’s day of reckoning. Norway is not in the EU and yet strangely there is no visible sign that civilisation is about to collapse. Quite the reverse! Indeed, it is nice to be in a country that works. Being a once vaguely red-haired Yorkshireman Viking blood courses of course through my veins. That explains a lot you say. Göll (battle cry), as we Vikings say.

Of course, being a small country (population 4.9 million) with large natural resources helps. Even accounting for depletion Norway controls some 54% of North Sea oil reserves and 45% of gas reserves. More importantly the Norwegians have used the oil and gas bonanza sensibly for when Oslo can no longer call upon nature’s bounty. This sits in stark contrast with much of the rest of Europe which prompted me to pose a rather serious question at this rather serious moment; just how broke are we Europeans?

Someone should ask the question. British Chancer Osborne has just delivered his Autumn Suicide Note and the finance ministers of the Onion’s No-Go Zone met this week to fail to inject a trillion mythical and not enough Euros into the equally mythical European Financial Stability Fund (EFSF). Therefore, your faithful blogonaut pillaged six well-known havens of the dismal economics science to bring you the answer. The six dens of iniquity are in order of self-importance Euro stat, the Economist, the UK Office for National Statistics, Nation Master, the CIA (which knows everything, but tends to forget when it matters) and the Organisation for Extremely Careful Digits (OECD).

Right, pay attention. Apparently we must first distinguish between a national debt and a budget deficit. Still with me? The national debt is the accumulation of all budget deficits since the Battle of Trafalgar, or maybe even before (was there ever a ‘before’ Trafalgar?). The budget deficit, on the other hand, is the shortfall (for that read massive, gaping black hole) between what income a European government generates over a single year and what it spends. To me both seem pretty bad but then again I am only a Viking.

Now, according to Norse legend it is precisely the interaction between debt and deficit that is so exercising the Dark Lords of the Market Universe who seem so determined to bring the halls of Valhalla crashing down. They do this by lending their ill-gotten gains to the very politicians (the Dark Lords (and Lady) of the Political Underworld) who caused this mess in the first place. It is the no-longer electable in pursuit of the utterly corruptible.

Being a tad miffed the Dark Lords are hiking the cost of ‘their’ money to remind our Dear Leaders that they will have to pay for at least one lunch in their lives. Trapped in the middle are the so-called ‘squeezed’, you and me, who have to service the interest on innumerable, clearly innumerate and quite probably inebriate free lunches by paying more tax, selling off the state that apparently we use to own to someone else or having our savings crushed by the rapacious banks that caused this almighty mess in the first place.

So, Great Hammer of Thor, here are the facts! Let me start with the Americans by way of Euro-comparison. Johnny Yank now has a budget deficit of some $15 trillion or €11.3 trillion which is some 10.7% the size of the US economy with a national debt of 65.2%... Believe me that is big. So, the Yanks are loud, proud and broke, but I suspect we have not heard the last of those people and if anyone seriously expects them to pay they will be nuked – pay-back for the Americans will mean Armageddon. Go ahead, make my day!

Then there is that mythical island long spoken about around Viking fires. The British budget deficit will peak at around 12% of the size of the economy in 2011-12 (Europe’s largest). However, there is some debate over the size of the national debt. The CIA puts it at 59% the size of the economy, the UK’s Office for National Statistics at around 61%, whereas Eurostat has it at some 76.5% (the Euro-Aristocracy could never count properly). This is due mainly to disagreement about how the British account for defence expenditure. However, as I am not aware the British are any longer spending money on defence I will stick to the lower estimate. Either way Britain is broke, weak and confused. Situation normal, all fudged up. Keep calm and carry on.

The great fortress of the Dark Lady Germany has a budget deficit some 5.3% the size of the economy and a national debt at 57.4%. For some reason this apparently means the Germans are rich. However, Berlin has decided that as the centennial of the sinking of the Titanic is fast approaching (April 2012) a re-enactment will then take place. Berlin will sink the good ship Euro with a new treaty. Germany will thus not be rich for long. Meanwhile, Europe’s other ‘leader’ France has a budget deficit some 8% the size of the economy and a national debt at 85%. France is not of course broke but suddenly will be after next May’s presidential elections. Then paying off of French debt will be then deemed by Paris to be Europe’s historic duty. Nous sommes tous Europeens maintenant, mais vous devez payer! Thankfully, we Vikings control Normandy.

The ‘best’ of the Onion’s rest speak for themselves. Belgium has a budget deficit at 5.6% and a national debt some 85.4% the size of the economy. At the very heart of the Onion Belgium now has an historic opportunity to make Europe an image of itself; utterly broke, utterly divided with no effective government and doomed to fall apart unless by some miracle it can persuade all other EU states to scrap themselves and create a federal Europe. I suppose it is the time of seasonal good will and we are approaching Christmas and there are certainly enough turkeys around these days to vote for their own demise. Ireland meanwhile has a budget deficit of 12.2% with a national debt of 38%, which is an awful lot of Guinness. Dublin is thus broke but thankfully has a time-honoured alibi; blame the British.

And what about Club Med? Spain has a budget deficit of 8.5% and a national debt of 41.6% - good at football and tennis, sadly not so good at economics. Portugal has a budget deficit of 7.6% with a national debt of 62.6% with absolutely no means to pay it back. Hasta la vista, baby, or whatever the Portuguese equivalent. Meanwhile, Italy has a budget deficit of 5.4% but a national debt of 100.8% (one set of figures has it as high as 120%). Chaos reigns in a very broke Rome – so it is business as usual then. Meanwhile, the poor old Greeks will bear no gifts for many a Trojan moon. Athens faces a budget deficit of 9.8% and a national debt some 94.6% the size of the economy.

Norway? The Norwegians have a budget surplus (yes a surplus) some 11% the size of the economy. And even though Oslo has a national debt some 60% the size of the economy it also has the world’s largest sovereign wealth fund.

So, just how broke are we Europeans?  Well and truly muggered! So, either Norway offers a fellow Viking asylum, or I invade.

Just call me Sven!

Julian Lindley-French